California Regulations 15497

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§ 15497 Adjustments in the Amount of a Group Self Insurer's Security Deposit

(a) Each group self insurer's security deposit requirement pursuant to Labor Code Section 3701 shall be reviewed by the Manager at least annually following receipt of the private group's Self Insurer's Annual Report. If following the receipt of the group self insurer's annual report an increase in security deposit is required, the increase shall be calculated pursuant to Labor Code Section 3701 and Section 15496(a) of these regulations and shall be posted no later than May 1 of that year.

(b) In addition to any increase in the security deposit pursuant to subsection (a), the Manager may require the group self insurer to post additional amounts pursuant to Section 15496 in the event that new affiliate members have been added to the group self insurer but have not yet reported a full year of losses, in the event of audit increases pursuant to Section 15301, or in the event of a change in the deposit rate pursuant to Sections 15497 or 15497.1.

(c) No group self insurer shall reduce its security deposit based on calculations pursuant to Section 15496(a) without prior written authorization from the Manager.

(d) For good cause, the Manager may require a group self insurer to increase its security deposit at any time. Good cause includes, but is not limited to, increases in group membership, increases in losses as indicated in Self Insurer's Annual Report or by audit over losses projected in actuarial reports, or failure of the group self insurer to maintain total assets greater than its total liabilities.

(e) In the event that a security deposit increase is required and upon sending by the Manager to the group self insurer a letter demanding the increase, a perfected security interest in the group self insurer's assets to the extent of any unsecured portion of the group self insurer's incurred liabilities shall be created in favor of the Director pursuant to Labor Code Section 3701(j).

Note: Authority cited: Sections 54, 55, 3701.8 and 3702.10, Labor Code. Reference: Sections 59, 3700, 3701, 3701.5, 3701.7, 3701.8, 3702, 3702.3, 3702.6, 3702.10, 3740, 3741, 3742, 6319(f) and 6401.7, Labor Code.